If any of London's newly-elected councillors want a lesson in how not to run a contract-bidding process, they might like to take a field trip to Westminster.The Conservative-run council has spent six months and more than £1 million trying to award a £50 million parking contract. After a long-running process that saw Westminster award the contract to a new firm, revoke the appointment, fight a law suit, and re-open the expensive tendering process for a second time, the Evening Standard can reveal it has now decided to stick with its incumbent parking company.

Councillor Paul Dimoldenberg, Labour leader in Westminster, today called for heads to roll over what he termed a “very unsatisfactory and expensive fiasco”.

The long-running process began at the end of last year when the council launched a procurement process for bidders to apply to run its parking contract. Then in February Westminster named Mouchel, the FTSE-listed support services group, as its preferred bidder for the four-year contract to provide parking enforcement services for the borough.

Mouchel then happily told shareholders at its half-year update in February: “It has been confirmed that we have been appointed as preferred bidder in Westminster, the largest on-street parking enforcement and city management service contract in Europe. The commission is for a four-year period (extendable to six).”

But not so fast, Mouchel. That was just the start of a near-farcical process which is said to have cost local taxpayers £1.1 million and has been branded “totally unprecedented” by perplexed contractors.

After naming the firm as its top choice, Westminster then admitted it had botched part of the procurement procedure. In-house lawyers discovered “a flaw in the contract document” which meant the council had to re-open the bidding. That admission then sparked complaints from one of the bidders, Apcoa of the US, one of the world's biggest parking enforcement companies.

Westminster then ran the entire tender again but with a new clause that effectively excluded Apcoa from bidding. Enraged, Apcoa launched a legal action to get the decision overturned but recently lost the case.

Now the Evening Standard has discovered that Mouchel has been stripped of its preferred status, with Westminster instead awarding that status to NSL, the parking giant formerly known as NCP, which has been operating the contract for the past seven years.Mouchel insiders said they were furious at the action and may appeal. Apcoa is also expected to protest.

The preferred bidder status means NSL could be re-awarded the deal as early as next week.

Labour leader Dimoldenberg said: “This whole process has cost the council over £1.1 million. Now we find the original contractor has got the job. It's a ridiculous, crazy situation. Residents and motorists are entitled to a full explanation over this mismanaged parking contract. Somebody at Westminster needs to take personal responsibility for this very unsatisfactory and expensive fiasco which has revealed very serious failures.”

Campaigners called for an official inquiry into how the contract was awarded. Graham Jones, spokesman for the campaign group No to the Bike Parking Tax, said: “Westminster awarded the contract to Mouchel, then faced a legal challenge which was thrown out of court, so why did it not stick with its original decision? This scandal requires a council inquiry.”

Kevin Goad, Westminster council's head of commissioning, said: “Following the discovery of a flaw in the initial contract process we stopped the procurement exercise. This was to ensure we were being fair and transparent to all those involved in the process which was the right and legal course of action to take. This week, the council has named a preferred bidder for its new parking enforcement contract. We are currently in a ten-day standstill period and expect to sign the formal contract with them later this month.“Any additional costs incurred through this process will be recovered many times over through substantial savings with the new contract.”

Tim Cowen of NSL commented: “We have noted the announcement that we are preferred bidder but would not wish to comment further because of the legal 10-day standstill period.”An insider in the parking enforcement industry stalwart said he “couldn't record a process quite like this ever before”. He added: “We're now in tthe standstill period, when it would normally be very, very unusual for a challenge to crop up, but the rest of this case has been unprecedented, so who knows?”

The £50 million contract covers monitoring and maintenance of CCTV cameras to pick up illegal U-turns, illegal driving in box junctions and other parking offences. It also pays for the 100 or so parking attendants patrolling the streets of Westminster.

Danny Chalkley, Westminster's cabinet member for city management, did not respond to calls.